DOJ planned 'state secrets' privilege in Booz Allen case

Jun. 12, 2013 - 06:00AM
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Last year, one day after the Justice Department signaled plans to invoke the rarely used “state secrets privilege” in a lawsuit accusing Booz Allen Hamilton of stealing information from a technology firm, the dispute quietly ended.

The lawsuit, filed by Blackbird Technologies Inc., ended after the Justice Department told both companies that it would invoke a legal measure so rare that it was employed only twice in civil cases from September 2009 to April 2011, according to a government memo and court records reviewed by Federal Times.

The state secrets privilege allows the government to block civil litigation or deem key evidence off limits in the name of national security, but it requires that the attorney general personally approve the move. The use of the privilege was criticized by civil liberties groups during the Bush administration.

Booz Allen finds itself under scrutiny after former employee Edward Snowden, a self-described 29-year-old high school dropout, recently leaked details to the Washington Post and Guardian newspapers about the National Security Agency collection of millions of phone and Internet records.

The Blackbird lawsuit accused Booz Allen of violating a nondisclosure deal, using Blackbird’s proprietary information and shutting the company out of what court records call the government’s “Haystack II” solicitation involving portable DNA testing.

The case was filed in Fairfax County, Va., Circuit Court in 2011, but moved to U.S. District Court in Alexandria, Va., after Booz Allen lawyers said the claims involved classified national security information, which drew the Justice Department’s interest.

After months, the Justice Department told Blackbird on Feb. 13, 2012, that it intended to intervene “to protect certain national security interests” — and the next day, a Blackbird attorney filed papers seeking to dismiss the case.

“The DOJ’s proposed intervention will likely again generate undue public attention relating to this case,” Blackbird explained in a court filing.

“As a national security contractor dedicated to serving the best interests of its customers, Blackbird is unwilling to participate at this time in litigation which could adversely impact government customers or create precedent adverse to the legal interests of the national security community,” Alexander Thomas, an attorney for Blackbird, wrote.

James Fisher, a spokesman for Booz Allen, declined to comment on the lawsuit Wednesday.

Blackbird, which describes itself as a technology solutions provider for the defense, law enforcement and intelligence sectors, did not immediately respond to an inquiry about the lawsuit Wednesday.

Court records show the Justice Department never actually intervened in the case, but government lawyers told both parties that they were going to do so, records show.

The Justice Department also made clear in court filings seeking to stay discovery that senior officials needed time to deliberate on whether to invoke the state secrets privilege, which requires multiple layers of review.

“A stay of proceedings would allow this process to proceed and protect the United States’ interest in safeguarding the classified information implicated by Blackbird’s claim,” assistant U.S. Attorney Dennis Barghaan Jr., wrote in a filing.

Neither the Justice Department nor a lawyer for Blackbird were immediately available for comment Wednesday.

During the Bush administration, civil liberties groups complained about the government’s use of the state secrets privilege, saying it could be employed with little oversight to shield information considered embarrassing but not really classified.

Steve Aftergood, director for the Federation of American Scientists’ Project on Government Secrecy, said overall figures are hard to track, but the Obama administration has continued invoking the privilege, but at a slower rate than the Bush administration.

“The concern is that the privilege was originated to exclude particular facts or pieces of evidence from litigation,” Aftergood said. “Over time, it evolved into something more like a get out jail free card, which is used to terminate unwanted litigation.”

In a 2011 memo to the Senate Judiciary Committee, the Justice Department said that a task force in 2009 had reviewed “then pending cases,” finding the privilege was employed “sparingly and appropriately.”

In cases involving private litigation — where the government wasn’t named as a party — the privilege was invoked in about half the cases to allow the litigation to proceed, the task force found.

But in remaining cases, the Justice Department said cases couldn’t go on because disclosure could harm national security.

In the same memo, the Justice Department said it had cited the privilege in two civil cases since the issuance of a state secrets policy in September 2009 and the date of the memo, which was April 29, 2011.

Based on court filings, there’s no telling how the Justice Department would have intervened in the Booz Allen case — whether by blocking off access to certain evidence or insisting the case terminate altogether.

The day after Blackbird filed a motion to dismiss the case, Booz Allen filed papers consenting.

“BAH [Booz Allen Hamilton] does not agree with Blackbird’s portrayal of the events in this matter, but in light of the national security interests implicated by this litigation, BAH consents to Blackbird’s motion,” Booz Allen lawyers wrote.

The lawsuit said the problems began when a Booz Allen associate had learned of Blackbird’s proprietary software because an unnamed government employee “wrongly” disclosed the information.

Blackbird and Booz Allen later signed a nondisclosure deal aiming to join in a bid for the “Haystack” solicitation, but Booz Allen “improperly procured or developed” a substitute of Blackbird’s product, according to the complaint.

Booz Allen denied the accusations.

The company derives almost all of its revenue from the federal government, with nearly one-fourth from intelligence agencies such as the NSA, according to Securities and Exchange Commission filings.